Q: What regulations are applicable to appraisal and evaluation programs?
A: The agencies have issued appraisal regulations as required by Title XI for the performance of real estate appraisals in connection with FRTs. These regulations prescribe which real estate-related financial transactions require the services of an appraiser, identify which categories of FRTs must be appraised by a state-certified appraiser and which by a state-licensed appraiser, and prescribe minimum standards for the performance of real estate appraisals in connection with FRTs.12
Financial institutions should also be aware of and comply with two additional rules that apply specifically to residential mortgage loans secured by a consumer’s principal dwelling – the HPML Appraisal Rule and the IFR on Valuation Independence.13 In addition, the agencies adopted regulations regarding real estate lending standards pursuant to section 304 of the Federal Deposit Improvement Act of 1991, which requires banks and federal savings associations to adopt and maintain written policies that establish appropriate limits and standards for extensions of credit that are secured by real estate.14
The Interagency Guidelines for Real Estate Lending Policies,15 which were promulgated as an appendix to the real estate lending standards, were issued to assist financial institutions in formulating and maintaining appropriate real estate lending policies in accordance with the regulations. The agencies’ real estate lending standards provide that each financial institution’s written policies must be consistent with safe and sound lending practices, and must ensure that the financial institution operates within limits and according to standards that are reviewed and approved by the financial institution’s board of directors.
12 OCC: 12 CFR 34, subpart C; Board: 12 CFR Part 225, subpart G; 12 CFR Part 208, subpart E; and FDIC: 12 CFR Part 323.
13 See supra, note 6.
14 OCC: 12 CFR 34.62; Board: 12 CFR 208.51; and FDIC: 12 CFR 365.2.
15 OCC: 12 CFR Part 34, subpart D; Board: 12 CFR Part 208, subpart E, Appendix C; and FDIC:
12 CFR Part 365, subpart A, Appendix A.